Russia's Oil Tax Revenues Halved in March - Bloomberg

In March 2023, Russia's revenue from oil taxes saw a drastic reduction, amounting to 494.9 billion rubles (6.18 billion USD). This figure represents a staggering 48% decline compared to the same month in the previous year, as reported by Bloomberg, referencing information from the Russian Ministry of Finance.

According to calculations, total federal budget revenues from the oil and gas sector fell by nearly 43% year-on-year, reaching 617 billion rubles. This sharp decline is attributed to the fact that the taxes for March were calculated based on February's prices for Urals crude oil, which is Russia's primary export blend. The Russian government reported that the average price for Urals oil in February was below $45 per barrel, significantly lower than the $59 per barrel projected in the state budget for 2026.

Oil prices have come under pressure as remaining buyers of Russian oil demanded significant discounts amid ongoing energy sanctions. Additionally, the strengthening of the ruble has also negatively impacted revenues from the oil and gas sector.

The drop in tax revenues from the oil and gas sector has contributed to an increase in Russia's budget deficit. Economic growth has stagnated, and expenses related to the war in Ukraine continue to deplete the country's resources, as noted by Bloomberg.

However, forecasts suggest that in the coming month, the Russian budget may anticipate a significant increase in revenues from oil and gas. This expectation is linked to the sharp rise in Urals oil prices in March, which occurred against the backdrop of conflict in the Middle East. By the end of March, Urals oil supplied to India, one of Russia's key buyers, was trading above $120 per barrel, exceeding the price of the benchmark Brent crude.

The war in Iran has effectively closed the Strait of Hormuz, a crucial route for energy exports from Gulf countries. Russian oil is not reliant on this route, making it more attractive for buyers in Asia who are seeking alternatives.

At the same time, the United States, in an effort to curb rising oil prices, has allowed several countries, including India, to purchase large volumes of Russian oil that are already at sea. This exemption has further bolstered demand for Russian oil in Asia.

According to Bloomberg, due to the sharp increase in oil prices, Moscow no longer plans to significantly cut budget expenditures and may even increase defense spending if the war in Ukraine drags on. Nevertheless, Russian President Vladimir Putin has repeatedly urged the government and oil producers to adopt a cautious approach to spending, as high oil prices may be temporary.

Russia's oil and gas revenues in March were calculated based on an Urals oil price of $44.59 per barrel, which is lower than the $61.69 per barrel recorded a year earlier. The exchange rate was set at 76.85 rubles per dollar, compared to 92.9 rubles per dollar in March 2025. This indicates that the budget received fewer rubles for each barrel extracted and sold.

Oil revenues in March peaked at a five-month high due to the tax payment schedule in Russia, where the profit tax is primarily paid four times a year—in March, April, July, and October.

As reported by Ukrinform, Asian countries facing energy challenges in their domestic markets due to the Gulf conflict are actively purchasing Russian oil following a temporary reprieve from U.S. sanctions.

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